In a crucial hearing for the high-profile guild-vs.-agencies battle in Los Angeles today, U.S. District Court Judge Andre Birotte Jr. issued a tentative ruling against the guild’s motion to dismiss the suits.
Coming just days after blocking an attempt by the Justice Department to participate in the case, Birotte put the tentative out before the nearly two-hour hearing began. The DTLA Judge then heard arguments from attorneys for both sides. At the conclusion of the hearing, Birotte told the assembled attorneys and agencies reps that he would put a final ruling in the docket “in a week or two.”
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If the tentative stands, it will be a big win for CAA, WME and UTA against the WGA in the long public and court battle the past several months
CAA’s attorney, Richard Kendall of Kendall Brill & Kelly, said Friday of the tentative ruling, “I thought it was extremely well-reasoned and persuasive.” Tony Segall of L.A.’s Rothner, Segall & Greenstone, who is representing the WGA, didn’t speak during the 90-minute hearing and had no comment on the judge’s decision but said afterward, “I think we made our case brilliantly.”
Up next, Judge Birotte will hear the agencies’ motion to dismiss the WGA’s counter-claims on January 17.
Denial of the WGA’s motion to dismiss is not appealable, so now the case could proceed to trial after the discovery process, which is what the agencies want if the Judge holds to his tentative. Had Birotte granted the motion to dismiss, the agencies could have taken their case to the Ninth Circuit Court of Appeals, which is what the guild wanted.
It’s also possible in a final ruling that the judge will find that some portions of the agencies’ consolidated complaint will be dismissed and other portions will be allowed to stand. In that case, whatever portions of the complaint survive the motion to dismiss will then proceed, eventually, to trial.
The agencies’ suits include claims that the WGA, in its nearly eight-month campaign to end film and TV packaging, has restrained competition “on a staggering scale” through illegal means, including agreements with non-labor parties in service of a group boycott and “overly restrictive restraints in commercial markets that the union has no authority to regulate.”
The guild alleges that the three agencies’ packaging fee model violates federal antitrust laws and the Racketeer Influenced and Corrupt Organizations (RICO) Act. The WGA also claims that packaging fees violate the agencies’ fiduciary duty to their clients and constitutes “a system of illegal kickbacks and price-fixing under federal law.”
In their motion to dismiss the suit, the WGA East and West said “the three dominant Hollywood talent agencies” are engaged in an “attack” on the WGA’s “federally approved role as the exclusive representative of writers in television and film, based on the agencies’ disapproval of the unions’ good faith judgment about how to protect their members when delegating representational authority to individual talent agents.”
According to the WGA countersuit: “The agencies’ federal antitrust claim fails, because the guilds’ conduct is fully protected by the antitrust labor exemption. Separately and independently, the agencies fail to plead that the guilds agreed to unreasonably restrain trade, that the guilds possess a dominant market position, and that the agencies have suffered an antitrust injury.”
The WGA also claims that it has not involved neutral “secondary” parties in its dispute with the agencies, and that the agencies’ claims fail because the WGA is “acting within their statutory authority as exclusive representatives under the National Labor Relations Act.”
Two key legal issues were at the heart of today’s hearing: whether the agencies’ complaint adequately addressed their allegations that the guild’s actions are outside traditional union activities; and whether the WGA joined with non-labor groups in a campaign to ban the longstanding commercial practice of packaging.
Attorney Jeff Kessler of Winston & Strawn argued on behalf of WME, Adam Levin of Mitchell Silberberg for UTA and Richard Kendall of Kendall Brill & Kelly for CAA. Tony Segall of Rothner, Segall & Greenstone in Los Angeles, is representing the WGA.
In evaluating the WGA’s motion to dismiss, Birotte had to assume that the facts as alleged in the agencies’ consolidated complaint are true. Based on that, he decided that their complaint stated a legally sufficient cause of actionand therefore denied the WGA’s motion to dismiss.
The legal battle stems from the WGA’s April 13 ordering of its members to fire their agents en masse who refused to sign its Code of Conduct, which originally banned packaging fees and agency affiliations with related production entities. Since then, the guild has modified its code to allow signatory agencies to continue packaging until Jan. 22, 2021 – and even longer if it doesn’t get two of the Big Four agencies to sign up. The latest version of the guild’s deal also allows agencies to own up to 5% of an affiliated production entity.
All three agencies have made similar claims against the WGA, which are what the had sought was asking the court to dismiss today. In its lawsuit, CAA alleges that the WGA “has organized a group boycott and unlawful restraint of trade targeting CAA and other talent agencies. The group boycott is, as the WGA’s leadership has freely acknowledged, a ‘power grab.’”
The WGA filed its original lawsuit against the agencies in state court on April 17, and the CAA, WME and UTA countered with their antitrust lawsuits in June. Then on August 19, the guild withdrew its state case and filed counter-claims in the agencies’ federal antitrust case.
Erik Pedersen & Dominic Patten contributed to this report